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Save UAL: Winner #1

My name is Jim Kelly and I'd like to introduce myself as the new CEO of UAL Corporation. In this briefing I will be presenting a five-point plan of action in order to stem the hemorrhaging that is currently occurring within United Airlines. The plan is as follows:

Effective December 1, 2001 USAirways(NYSE: U) will join the Star Alliance. This union will benefit both UAL shareholders and customers. United will gain important East Coast and Southeast access as well as significant revenue synergies at virtually no cost to the company. Both airlines will codeshare on each other's flights. Mileage Plus members and Dividend Miles members will be able to earn miles on either United or USAirways. Due to the precarious financial positions of both carriers, we are hopeful of expedited approval from the Department of Justice. Further, we will request anti-trust immunity.

Effective immediately, UAL Corporation will suspend further investment in Avolar (our private jet service). Although, there was opportunity for significant revenue enhancement through the venture, the Board of Directors has agreed that the project can no longer continue due to the current cash crisis at United.

In an effort to improve operations at United, effective November 1 we will be introducing performance-based compensation and bonuses to our employee groups. Cash bonuses will be offered each month that United improves its performance in the areas of on-time departures and baggage handling. It was agreed by the Board of Directors that the incentive must be provided in order to restore operational reliability.

Effective immediately, Gregg Brennan, our new president, and I will begin a series of employee roadshows at all of our hub cities as well as some of our secondary cities, such as JFK, EWR, BOS, MIA, LHR, CDG, NRT, and HKG. These roadshows will enable us to introduce ourselves to our employee groups as well as seek solutions to deficiencies in our operations. I believe that the front-line employees are a vital source for information and can provide us with insight into where and why systematic breakdowns occur.

We are suffering from significant over-capacity in some of our markets where we operate the Boeing 747-400. On December 1, we will begin converting ten 747-400 aircraft to freighters and re-introducing United Worldwide Cargo. Improved revenue performance is expected and rather than spend money on the launch of Avolar, we will merely re-allocate the resources we already have.

Looking forward, as financial stability returns to the company, we'd like to re-negotiate the scope language in some of our union contracts. The scope clauses inhibit United from owning their United Express partners. I would ultimately like to bring the express carriers into the UAL fold. Since we don't own our partners, United suffers from decreased revenue streams that AMR and Continental enjoy. Furthermore, I believe that a gap exists in the quality of service between mainline United and United Express and that by wholly owning our partners we can close this gap.

I am also very eager to work with the IAM union in bringing negotiations to a close and reaching a mutually acceptable agreement for its members as well as for the company.

I want to thank you for your time and for this opportunity to speak with you today. Our new management team is eager to get to work in restoring United Airlines into a premier world-class global carrier.

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